Accurate Personnel Planning Vital to Non-Profits Expense Management
Posted by John Orlando on Fri, Mar 26, 2010 @ 12:49 PM
For many non-profits, personnel expenditures including payroll, payroll taxes and fringe benefits can be greater than 50% of their total expenses. Yet many non-profits have trouble accurately tracking these costs for all of their employees. An incorrect calculation can lead to over budgeting of your payroll taxes, such as FICA, or an underestimation of how much your people are really costing you. A variance in either direction can significantly affect your bottom line and possibly handicap your ability to fund other revenue-generating programs.
Microsoft Excel is the typical tool CFOs of non-profits use to budget payroll expenditures. However, as the organization grows, spreadsheet calculations become more complex and the incident of errors can increase. The management of multiple spreadsheets, alone, becomes an overwhelming task.
This was the situation with one of our customers, Brattleboro Retreat, a non-profit regional specialty mental health and addictions treatment center in Brattleboro, Vermont. They recognized the need to get a more accurate account of their personnel expenditures and that required implementing a solution that supported revenue planning, operating expense budgeting and payroll planning all-in-one with the ability to easily generate financial statements and management reports.
"We needed a budgeting and forecasting solution that had strong payroll planning features since payroll is our biggest expense," explained Financial Analyst II, Anne Fecto. "Budget Maestro allows us the flexibility to budget by 'position' as our staffing requirements vary throughout the year based on the demands of the programs we offer. We currently have 450 employees including salaried and per diem."
Ms. Fecto continues to explain, "We build our budget by projecting the census multiplied by the rate for each of our programs. Based on the census and projected revenue, we drive our staffing requirements for each program. Working with our department managers on their staffing requirements, vacancies, new hires and projected raises, we can plug these variables into Budget Maestro and the system will automatically generate our payroll expenditures that fall into the appropriate period. This way I can account for all our payroll and related expenses and know we haven't missed anything that may impact the departments' expenses".
These benefits, along with Budget Maestro's ability to expand as your organization grows, explain why the percentage of Budget Maestro customers from the non-profit sector continues to double in growth over the past few years. Non-profits can greatly increase their ability to budget and forecast with confidence,e for both strategic and operational needs, with the help of tools like Budget Maestro.
Read the entire Brattleboro Retreat case study.